December 18, 2012 archive

How bad is it?

Pretty damn bad.

What Chained CPI Means, and Why a Cut in a Time of Inadequate Social Security Benefits Makes No Sense

By: David Dayen, Firedog Lake

Monday December 17, 2012 2:45 pm

Let’s just make clear what chained CPI is all about. The idea here is that you should not measure the cost of living simply based on the consumer price index, and then raise the costs accordingly with the rise in prices. Instead, economists say, you have to account for the substitution effect in response to price shifts. When someone cannot afford steak, maybe they buy more chicken, the theory goes. By “chaining” the CPI to account for the substitution effect, you’re really shrinking the inflation in the index, because you’re assuming that the individual will spend less by changing their lifestyle. As a result, cost of living adjustments based on a chained CPI will rise more slowly that COLAs based on an unchained one.

(T)he idea of chaining medical treatment, as if you can just substitute a hip replacement with something cheaper, is silly. Overtreatment does exist, but the concept of a senior citizen shopping for cheaper medical care is actually kind of cruel.

Shifting to CPI-E would actually reflect the real costs of seniors, and would have their cost of living adjustment keep up with their actual needs. But of course, that’s not the goal of public policymaking. It’s to “save money,” in this case at the expense of the elderly, particularly those over the age of 80.

Chained CPI only makes sense if you think Social Security benefits and the cost of living adjustment are currently adequate enough for seniors. The fact that 15.1% of seniors are in poverty, according to the newest measure, shows that this is not at all the case. We need higher, not lower, Social Security benefits, as retirement security outside of the program withers. But adequacy is not the goal of those who want to slash benefits. And Democratic enablers call it something they can “live with.” Obviously none of them are 80 or older.

Obama’s Latest Fiscal Slope Offer: I’m Missing the Part Where Republicans Give Up Something

By: David Dayen, Firedog Lake

Tuesday December 18, 2012 6:00 am

From where I’m standing, this is a deal for the President to break his promise on tax rates, allow half of the fiscal slope to go forward, probably cut as much as 2% from GDP in 2013, and enact permanent benefit cuts to Social Security (and other government benefits) as well as unspecified cuts to health care programs, in exchange for…

  1. a routine extension of unemployment insurance;
  2. no more than $50 billion in infrastructure, probably less;
  3. a permanent extension of things Congress does annually like clockwork (making them permanent is good public policy, but doesn’t functionally change much);
  4. the chance to do this again in two years.

Meanwhile, Republicans give up tax rates that were going up anyway, an unemployment extension that they have yet to fail to pass, and a bit of infrastructure. That’s it, in exchange for cuts that will put discretionary spending well below traditional levels, cut Social Security benefits and basically ensure smaller government through caps and cuts.

More on Chained CPI, the Benefit Cut for Social Security on the Table in Fiscal Slope Discussions

By: David Dayen, Firedog Lake

Tuesday December 18, 2012 6:45 am

First of all, this is a benefit cut of about 0.3% a year, as Dean Baker points out. He adds that “This loss would be cumulative through time so that after 10 years the cut would be roughly 3 percent, after 20 years 6 percent, and after 30 years 9 percent.” Actually if we started using chained CPI in 2002, we’d be 3.6% behind today. That’s well over $1,000 a year, and the situation grows worse over time. So the greatest impact would be on the oldest seniors, which happens to correlate with the poorest.

If you think that senior citizens have had it too good for too long, getting that sweet sweet cost of living adjustment to make them unfairly wealthy, then maybe you think chained CPI is a solid idea. If you think that the highest expense for a senior is medical costs, that seniors don’t exactly comparison shop when they need medical care, that they cannot substitute along those lines, and that a cost of living index that features that substitution effect prominently doesn’t correspond to the real costs seniors face, well, you would be right.

(A)s supporter of a Social Security deal Kevin Drum says, adopting chained CPI for Social Security by itself is a terrible deal. Even if all of the savings from it get plowed back into reducing the long-term income gap, it doesn’t do enough by itself to eliminate that. It reduces the trust fund gap by about 1/3. Which means that fiscal scolds would still be clamoring for a deal to “fix” Social Security, and the fact that the solutions were entirely on the benefit side this time around won’t matter. This is just an invitation to more cuts down the road.

Paul Krugman tries to rationalize and bargain and basically gives a lifeline to cutting these benefits, at a time when senior poverty is on the rise. Ask yourself: are Social Security benefits, which average around $13,000 a year, currently adequate to serve this population, especially when 40% of seniors rely on it for over 90% of their income? Is the solution to 15.1% of seniors in poverty to cut their benefits slowly over time? Should the centerpiece of a deal to reduce the budget contain a benefit cut to a program that has its own dedicated funding stream and no budgetary impact?

UPDATE: First, Krugman has a new post up, saying he is now “marginally negative” on the deal after being “marginally positive.” He ignores the $800 billion in extra budget cuts in the deal.

Also, if anything I undersold the impact of chained CPI, since it would affect federal employee benefits that are tied to COLA, like postal workers.

Here is what Atrios (trained economist BTW) says-

To The Phones

White House


Your senators

Your House member.

No cuts to Social Security.

Gaius Publius @ Americablog offers this helpful digest-

What are we protecting?

We’re protecting three social insurance programs. These are:

    ■ Social Security

    ■ Medicare

    ■ Medicaid

What are we protecting them from? Anything that:

    ■ Reduces benefits

    ■ Turns the program from insurance to welfare (which only the “deserving” have access to)

How are these programs being threatened?

As near as I can tell, these are the threats. Note to foxes – this is the hands-off list. Each of these seven items is a benefit cut:

Social Security

    1. Raising the retirement age

    2. Chained CPI instead of current COLA

    3. Means-testing benefits


    4. Raising the eligibility age

    5. Increasing Part B premiums

    6. Increasing “cost-sharing”


    7. Shifting costs to the states by any means, such as “federal blended rate,” etc.


Zombies everywhere.  Originally posted September 22, 2011.

Lighter than Hare

On This Day In History December 18

Cross posted from The Stars Hollow Gazette

This is your morning Open Thread. Pour your favorite beverage and review the past and comment on the future.

Find the past “On This Day in History” here.

December 18 is the 352nd day of the year (353rd in leap years) in the Gregorian calendar. There are 13 days remaining until the end of the year.

On this day in 1918, the House of Representatives passed the 18th Amendment to the Constitution, along with the Volstead Act, which defined “intoxicating liquors” excluding those used for religious purposes and sales throughout the U.S., established Prohibition in the United States. Its ratification was certified on January 16, 1919. It was repealed by the Twenty-first Amendment in 1933, the only instance of an amendment’s repeal. The Eighteenth Amendment was also unique in setting a time delay before it would take effect following ratification and in setting a time limit for its ratification by the states.

Section 1. After one year from the ratification of this article the manufacture, sale, or transportation of intoxicating liquors within, the importation thereof into, or the exportation thereof from the United States and all territory subject to the jurisdiction thereof for beverage purposes is hereby prohibited.

Section 2. The Congress and the several States shall have concurrent power to enforce this article by appropriate legislation.

Section 3. This article shall be inoperative unless it shall have been ratified as an amendment to the Constitution by the legislatures of the several States, as provided in the Constitution, within seven years from the date of the submission hereof to the States by the Congress.

The amendment and its enabling legislation did not ban the consumption of alcohol, but made it difficult to obtain it legally.

Following significant pressure on lawmakers from the temperance movement, the House of Representatives passed the amendment on December 18, 1917. It was certified as ratified on January 16, 1919, having been approved by 36 states. It went into effect one year after ratification, on January 17, 1920. Many state legislatures had already enacted statewide prohibition prior to the ratification of the Eighteenth Amendment.

When Congress submitted this amendment to the states for ratification, it was the first time a proposed amendment contained a provision setting a deadline for its ratification. The validity of that clause of the amendment was challenged and reached the Supreme Court, which upheld the constitutionality of such a deadline in Dillon v. Gloss (1921).

Because many Americans attempted to evade the restrictions of Prohibition, there was a considerable growth in violent and organized crime in the United States in response to public demand for illegal alcohol. The amendment was repealed by the Twenty-First Amendment on December 5, 1933. It remains the only constitutional amendment to be repealed in its entirety.

I read the news today, oh boy.


As America indulges narcissistically in the deaths of school children at the hands of a young man deranged by his own mentally deranged society, I wonder, where is their great display of emotion for the millions of dead and displaced Iraqis after years of American wars and sieges. You know, the dead from the Iraq-Iran war, Operation Desert Storm (Stormin’ Norman!), the 500,000 dead Iraqi children from the sanctions Mdm. Albright thought were “worth it,” and the million or so dead from our most recent engagement, aka war crime, at the hands of Mssrs. Cheney, Rumsfeld, und Bush. Not to mention the ten bazillion other foreign places where American violence remains “incontinent,” so to speak, but more like “exploding shits.”

Mr. Obama, Master of Predator & Reaper Drones that kill children arbitrarily, and their funeral and medic and wedding parties, can go piss his tears up a rope.

At least Susan Rice got “torpedoed.”  Sloshy-assed, skank-assed ho.  Responsibility to protect, my ass.

Muse in the Morning

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Muse in the Morning

Holiday Adornment 5

Sen. Daniel Inouye Has Died

Sen Daniel InouuyeDemocratic Hawaii Senator Daniel Inouye, age 88, has died from complications of a respiratory infection at Walter Reed National Military Medical Center in Washington, DC. Sen. Inouye has represented Hawaii in both the House and the Senate since it became a state in 1959. He was  the first Japanese-American to serve in the U.S. House of Representatives and later the first in the U.S. Senate. He was elected to the Senate in 1963.

At the time of his death, Sen. Inouye was the most senior senator and  the second longest serving U.S. Senator in history after Robert Byrd. As the most senior senator, he was chosen President pro tempore by the Senate, making him third in the presidential line of succession after the Vice President and the Speaker of the House of Representatives. That post now goes to Sen. Patrick Leahy (D-VT).

Sen. Inouye served in the army during WW2 from 1941 to 1947, first as a volunteer in the medical corps and later in the European theater. In 1945, during a battle in Italy with German troops, he was severely wounded but continued to lead his men in battle:

On April 21, 1945, Inouye was grievously wounded while leading an assault on a heavily-defended ridge near San Terenzo in Tuscany, Italy called Colle Musatello. The ridge served as a strongpoint along the strip of German fortifications known as the Gothic Line, which represented the last and most dogged line of German defensive works in Italy. As he led his platoon in a flanking maneuver, three German machine guns opened fire from covered positions just 40 yards away, pinning his men to the ground. Inouye stood up to attack and was shot in the stomach; ignoring his wound, he proceeded to attack and destroy the first machine gun nest with hand grenades and fire from his Thompson submachine gun. After being informed of the severity of his wound by his platoon sergeant, he refused treatment and rallied his men for an attack on the second machine gun position, which he also successfully destroyed before collapsing from blood loss.

As his squad distracted the third machine gunner, Inouye crawled toward the final bunker, eventually drawing within 10 yards. As he raised himself up and cocked his arm to throw his last grenade into the fighting position, a German inside fired a rifle grenade that struck him on the right elbow, severing most of his arm and leaving his own primed grenade reflexively “clenched in a fist that suddenly didn’t belong to me anymore”.[13] Inouye’s horrified soldiers moved to his aid, but he shouted for them to keep back out of fear his severed fist would involuntarily relax and drop the grenade. As the German inside the bunker reloaded his rifle, Inouye pried the live grenade from his useless right hand and transferred it to his left. As the German aimed his rifle to finish him off, Inouye tossed the grenade off-hand into the bunker and destroyed it. He stumbled to his feet and continued forward, silencing the last German resistance with a one-handed burst from his Thompson before being wounded in the leg and tumbling unconscious to the bottom of the ridge. When he awoke to see the concerned men of his platoon hovering over him, his only comment before being carried away was to gruffly order them to return to their positions, since, as he pointed out, “nobody called off the war!”

The remainder of Inouye’s mutilated right arm was later amputated at a field hospital without proper anesthesia, as he had been given too much morphine at an aid station and it was feared any more would lower his blood pressure enough to kill him.

Although Inouye had lost his right arm, he remained in the military until 1947 and was honorably discharged with the rank of captain. At the time of his leaving of the Army, he was a recipient of the Bronze Star Medal and the Purple Heart. Inouye was initially awarded the Distinguished Service Cross for his bravery in this action, with the award later being upgraded to the Medal of Honor by President Bill Clinton (alongside 19 other Nisei servicemen who served in the 442nd Regimental Combat Team and were believed to have been denied proper recognition of their bravery due to their race).

The senator had been hospitalized since the beginning of this month, fighting complications of a respiratory infection. Doctors were concerned about his blood oxygen levels.

His staff said that his last word was “Aloha.”

Sen. Inouye is  is survived by his wife, Irene, a son, Ken, and a granddaughter named Maggie. Inouye’s first wife, Margaret, died in 2006.

The Overhyped Fiscal Myth

Cross posted from The Stars Hollow Gazette

Bruce Bartlett and Yves Smith on Overhyping the Fiscal Cliff

Bruce Bartlett and Yves Smith join Bill in a discussion about why Washington insiders are talking about the deficit crisis instead of the jobs crisis.

Transcript can be read here.

H/T Yves Smith at naked capitalism:

I had fun in this conversation with conservative Bruce Bartlett, even though he stole some of my best lines (like Obama not being a liberal). Bartlett is in exile from the Republican party for saying things like Keynesian deficits stimulate the economy (after doing research and finding he couldn’t debunk it based on data) and unions help promote higher wages.

Repeat after me, “Austerity is bad.

No Pro Gun Senators Would Appear on MTP

Cross posted from The Stars Hollow Gazette

From Politico

NBC’s David Gregory said Sunday that not a single pro-gun-rights senator accepted a “Meet The Press” invitation to appear on the show.

“A note here this morning: We reached out to all 31 pro-gun rights senators in the new congress to invite them on the program to share their views on the subject this morning,” he said. “We had no takers.”

One did appear on right wing morning show proffering the inane argument that if the principal had a M4 carbine, an assault rifle designed by the U.S. military for urban warfare, this tragedy could have been prevented. Apparently, he missed the  fact that even well trained law enforcement officers can’t shoot straight under stress often shooting one of their own or innocent civilians and that is only part of the problem with that ridiculous idea. Arming teachers is not a solution but gun rights advocates will still put it out as a solution to avoid discussing better regulation of all fire arms in this country.

Mr. Gregory’s guests were NYC Mayor Michael Bloomberg and Sen Dianne Feinstein (D-CA) who said she would introduce gun assault weapons ban legislation on the first day of Congress.

She should also add a provision for mandatory background checks and waiting periods at gun shows; tighter background checks in general and reporting all gun purchases to Department of Homeland Security or the FBI.

Will this be enough to prevent another tragedy like Sandy Hook? Probably not. It won’t take the assault rifles away from their current owners but it will make it harder to get one.